IMF Staff Country Reports

The 2023 Article IV Consultation discusses that the Republic of the Marshall Islands (RMI) is in the midst of a post-pandemic recovery. Real GDP declined by 4.5 percent in the fiscal year ending September 2022 due to lower fisheries production arising from the sale of a fishing vessel by a domestic operator. Growth is expected to strengthen to 3 percent over FY2023-24 as performance in the fisheries sector improves, with construction activity supported by the resumption of donor-financed projects and preparations for the 2024 Micronesian Games. Inflation is expected to moderate as commodity prices ease and supply disruptions recede. The current account surplus is expected to narrow further as coronavirus disease-related grants expire, though improved export performance is expected to lead to a narrowing of the trade deficit. The medium-term outlook is contingent on the successful renewal of the Compact of Free Association agreement with the United States. A new agreement would strengthen the RMI’s fiscal and external positions while in its absence, the fiscal and current account balances are expected to slip into deficit over the medium term. Risks are tilted to the downside, reflecting the RMI’s geographical isolation and vulnerability to climate change.